Bullard says Fed ‘full steam ahead’ with bond purchases

Federal Reserve Bank of St. Louis President James Bullard said the Fed is in no hurry to reduce its record bond buying with inflation running below its 2% target.

“It is full steam ahead right now,” Bullard said today on Bloomberg Radio’s “Hays Advantage” with Kathleen Hays. “That is exactly what the committee is doing.”

A voter on monetary policy this year, Bullard was one of the first Federal Open Market Committee officials to urge slowing the pace of bond purchases in 2013 if warranted by economic reports, a position taken by Chairman Ben S. Bernanke last month. In 2010 Bullard initiated calls for a second round of bond buying, which ran from November 2010 until June 2011.

The yield on the benchmark 10-year Treasury note fell today to a two-month low, showing there’s little concern among investors about inflation risk. The note yielded 1.81% at 3:13 p.m. in New York, down from 1.86% yesterday.

Consumer prices rose just 1.3% in February from a year earlier, according to an inflation gauge favored by the Fed, and growth has been too weak to generate jobs for millions of fired workers. Unemployment in February was 7.7%.

Monetary policy is currently “appropriate,” Bullard said in the interview, adding that he didn’t call for a reduction in asset purchases at the FOMC’s meeting in March.

‘More Comfort’

“I don’t think we have to be in any hurry” to cut stimulus, Bullard said. “The committee has more comfort in a situation in which inflation is low.”

The FOMC has leeway to review economic data in the next few months and determine whether to pare back asset purchases known as quantitative easing, Bullard said.

“We are not forced into a decision right now,” he said. “If we continue to get good data on the economy, then we will have a decision to make.”

The economy is likely to grow around 3% this year, Bullard said. “Things are pretty good right now for the U.S. economy,” he said. “The surprise has been to the upside.”

Recent economic data has shown a pickup in growth and an improvement in the labor market. About 195,000 jobs were added last month and the unemployment rate stayed at 7.7%, according to the median estimates of economists surveyed by Bloomberg ahead of an April 5 report.